Raamdeo Agrawal bullish on India's growth story — 'Worst over for new age businesses'

With the high-cost inventory getting consumed, the earnings momentum is expected to build slowly, leading to better performance in the first and second quarters of the year, according to market veteran Ramdeo Agarwal. He feels that the worst is behind for new-age businesses, and they are expected to do well in the future.

In an interview with CNBC-TV18, Raamdeo Agrawal, Chairman, and Co-founder of Motilal Oswal Financial Services shared his views on the Indian economy. According to Agrawal, the first and second quarters of the year should be better as high-cost inventory gets consumed, and the earnings momentum builds slowly.

“Quarter one and quarter two should be much better because all those high cost raw material inventory will get consumed in the current year and next quarter onwards, we will see the margins expanding. I think the earnings momentum is going to build slowly from here onwards,” he said.

“Economy is likely to grow anywhere between 6 percent and 7 percent with 4-5 percent inflation,” he added.

He is optimistic about the future, and he believes that the worst is behind for new-age businesses, and sensibility is prevailing. Managements are working hard to generate profitability.

“The worst is behind. We have seen pessimism and some kind of a sensibility is prevailing and even managements are going for faster roads to profit,” he said.

Agrawal also pointed out that the rupee is continuously strengthening, and the current account deficit is falling, making it a very interesting time for the economy.

“Another bright spot, which is developing in the economy is rupee. We are in a very interesting turning point of the Indian economy,” he said.

The strengthening of the rupee and the falling current account deficit indicate that the economy is on a positive trajectory. It is an exciting time for the Indian economy, and investors should keep a close eye on the market.

He expects IT to come back with a vengeance, and investors can look at large midcap IT names.

“IT story is going to be the story of India. It is going to come back with a vengeance. You can go stock-by-stock, you have time, you can start building up your portfolio on IT,” he said.

He prefers large midcap IT names.

“Stocks like LTIMindtree, which don’t suffer from a lack of scale and also don’t suffer from the large scale,” he explained.

IT is one of the significant sectors in the Indian market, and Agrawal believes that it will come back with a vengeance. Investors can look at large midcap IT names to invest in this sector. However, it is always essential to conduct thorough research and exercise caution when investing.